NEW DELHI:
The Indian Government on January 1 announced the implementation of a 30 per cent tax on any income coming in through the transfer of virtual digital assets with no deductions and exemptions.
Finance Minister Nirmala Sitharaman while presenting the Budget 2022-23, said that there has been a phenomenal increase in transactions made through digital assets. And that the magnitude and frequency of these transactions have made it imperative for the Government to provide for a specific tax regime.
“Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent,” Sitharaman said.
Further stating, “No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital assets cannot be set off against any other income,”.
For the purpose of acquiring transactions details, providence will be made TDS on payment made in relation to transfer of virtual digital assets at the rate of 1 per cent of such consideration above a monetary threshold.
“Gift of virtual digital assets is also proposed to be taxed in the hands of the recipient,” she said.
“No Crypto bill but taxation at 30 per cent of virtual asset transfer gains and an additional 1 per cent tax collection at the time of transfer means that party seems to be over for crypto-assets and exchanges,” former Union Finance Secretary Subhash Chandra Garg, a key figure behind drafting the original Crypto bill, told IANS.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021, was set to be tabled in the Winter Session of Parliament that began on November 29, however, it could not be executed.
An estimated 15 to 20 million people have invested in crypto with no clarity on the size of the Indian crypto market.
According to latest reports, Indians have invested over Rs 6 lakh crore in crypto assets to date — a highly questionable figure, as no one has an accurate estimate about the kind of money being routed via crypto exchanges.
According to Bhaskar Majumdar, Managing Partner, Unicorn India Ventures, the tax on crypto/NFTs will now make it legalised and users won’t be able to circumvent tax and other financial regularities.
Grave concerns have now been raised over the misuse of digital coins on the Dark Web for terror acts and drugs trafficking by militant organisations, and for money laundering and hawala-based transactions — posing a serious threat to national security and a big challenge to the security agencies in India.
Nischal Shetty, Founder and CEO of, WazirX said that the tax clarity is a welcome move.
“Overall, it’s a huge relief to see that our government is adopting the progressive stance of going ahead in the direction of innovation. By bringing in taxation, the government legitimises the industry to a large extent,” he said. (IANS)
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